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Prime Healthcare Services’ $65 Million Scam Exposed
California-based Prime Healthcare Services, Inc., Prime Healthcare Foundation, Inc., and Prime Healthcare Management, Inc. (collectively Prime), and Prime’s Founder and Chief Executive Officer, Dr. Prem Reddy, have agreed to pay the United States $65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare.
According to the settlement agreement, Prime and Dr. Reddy will pay $61,750,000 and $3,250,000 respectively. The allegations state that Prime engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who originally presented to the Emergency Departments at 14 Prime hospitals in California.
The government claimed that the inpatient admission of these beneficiaries was not medically necessary because their symptoms and treatment needs should have been managed in a less costly outpatient or observation setting. Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program.
The settlement also resolves allegations that, from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses, including complications and comorbidities, in order to increase Medicare reimbursement.
“Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison for the Central District of California.
Prime also entered into a Corporate Integrity Agreement with the U.S. Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years.
The 14 hospitals owned by Prime Healthcare Services that are parties to the settlement agreement are: Alvarado Hospital Medical Center, Garden Grove Medical Center, La Palma Intercommunity Hospital, Desert Valley Hospital, Chino Valley Medical Center, Paradise Valley Hospital, San Dimas Community Hospital, Shasta Regional Medical Center, West Anaheim Medical Center, and Centinela Hospital Medical Center.
The 4 hospitals owned by Prime Healthcare Foundation that are also parties to the settlement agreement are: Sherman Oaks Hospital, Montclair Hospital Medical Center, Huntington Beach Hospital, and Encino Hospital Medical Center.
Prime Healthcare Management, a subsidiary of Prime Healthcare Services, provides management, consulting and support services to hospitals owned and operated by Prime.
Key Facts
- State: California
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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